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Equity Basics

What Is Face Value of a Share? Meaning, Formula and Example

Learn what face value means in stocks, how it differs from market price and book value, and why it matters for corporate actions.

By Kamal Kumar2026-09-203 min read

What Is Face Value of a Share?

Face value, also called par value, is the nominal value assigned to each share as part of the company's share capital structure.

For example, a company may have shares with a face value of ₹10.

Face value is different from market price.

Face Value vs Market Price

Suppose:

•Face value = ₹10
•Market price = ₹500

The ₹10 is the nominal value.

The ₹500 is the price at which the share trades in the market.

They represent different concepts.

Face Value and Share Capital

A simplified relationship is:

Share Capital = Number of Shares × Face Value

If a company has 100 crore shares with a face value of ₹10:

Share Capital = ₹1,000 crore

Amounts received above face value can be accounted for separately according to the applicable rules.

Face Value vs Book Value

For example:

•Face value = ₹10
•Book value per share = ₹150
•Market price = ₹600

All three can be different.

Book value reflects accounting net assets attributable to shareholders, while face value is a nominal share-capital amount.

Face Value and Stock Splits

A stock split changes the number of shares and reduces face value per share proportionately under the split structure.

Suppose:

•Original face value = ₹10
•Shares = 100 crore

After a 1:2 split, the face value could become ₹5 and the number of shares could become 200 crore, subject to the corporate action.

A split does not automatically create economic value.

Face Value and Dividends

Some companies express dividends as a percentage of face value.

Suppose:

•Face value = ₹10
•Dividend = 100% of face value

Dividend per share:

₹10

If the dividend is 50% of face value:

₹5 per share

This is why investors should distinguish dividend percentage from dividend yield.

See What Is Dividend Yield?.

NIFTY Example

Suppose a hypothetical NIFTY company has:

•Face value = ₹2
•Market price = ₹2,000
•Dividend = 500% of face value

Dividend per share:

₹2 × 500% = ₹10

Dividend yield:

₹10 ÷ ₹2,000 × 100 = 0.5%

Why Does Face Value Matter?

Face value can be relevant to:

•Share capital
•Stock splits
•Bonus issues
•Dividend declarations
•Corporate actions
•Historical price adjustments

It is generally not a standalone valuation measure.

Common Mistakes

•Confusing face value with market price
•Treating a 100% dividend as a 100% market return
•Confusing face value with book value
•Assuming a stock split creates value

How Investors Can Use It

1.Check the company's face value.
2.Review share capital.
3.Understand splits and bonus issues.
4.Interpret dividend declarations correctly.
5.Compare face value separately from market price and book value.

Final Thoughts

Face value is a basic equity concept that helps investors understand share capital and corporate actions.

It should not be confused with market value or intrinsic value.

Frequently Asked Questions

Is face value the same as market price?

No.

Can face value change?

Yes, corporate actions such as stock splits can change it.

Is face value useful for valuation?

Usually not as a standalone valuation measure.

Disclaimer

This article is for educational purposes only and does not constitute financial advice. Please consult a SEBI-registered investment adviser before making investment decisions.

This article is for educational purposes only and does not constitute financial advice. Please consult a SEBI registered investment advisor before making any investment decisions.