Face value
Face value is the fixed nominal value of one share as stated by the company, which is usually small and has nothing to do with the price the share trades at.
What it is
When a company issues shares, each share is given a nominal value, called its face value. In India it is commonly ₹1, ₹2, ₹5 or ₹10.
Face value is an accounting number. It is used to record the company’s share capital on the balance sheet. It does not change with the share price and does not tell you what the share is worth.
Where you will see it
Dividends in India are often announced as a percentage of face value. A 150% dividend on a share with face value ₹2 means ₹3 per share, not 150% of the share price.
Stock splits change the face value. When a company splits a ₹10 share into five shares, each new share has a face value of ₹2. The total face value of your holding stays the same.
What it does not tell you
A share with face value ₹10 trading at ₹2,000 is not “overpriced” compared with one at face value ₹1 trading at ₹200. Market price depends on the company’s profit, prospects and demand for its shares, not on face value.
For valuation, use market cap, P/E, P/B and the business itself. Face value is mainly useful for understanding dividend announcements and corporate actions.
Face value and a dividend announcement
A company with face value ₹5 per share declares a 60% dividend. That is 60% of ₹5 = ₹3 per share. If you hold 200 shares, you receive ₹600 before any tax. If the share trades at ₹300, the dividend yield from this payout is ₹3 ÷ ₹300 = 1%.
Common mistakes
- Thinking a dividend of 100% means you get your money back. It is 100% of face value, not of the price you paid.
- Confusing face value with book value or market price.
- Believing a share trading close to face value must be cheap.
A share has face value ₹2 and trades at ₹400. The company declares a 250% dividend. How much do you get per share?
- ₹5
- ₹1,000
- ₹250
Show the answer
₹5. The dividend is 250% of face value: 250% × ₹2 = ₹5 per share. The market price is not used.
Common questions
What is the difference between face value and market value?
Face value is the fixed nominal value set by the company. Market value is the price at which the share is trading on the exchange today.
Why is dividend declared on face value?
Indian companies have traditionally announced dividends as a percentage of face value. Convert it to rupees per share to understand what you will receive.
Does face value change?
Only through corporate actions like a stock split or consolidation. It does not change with the share price.
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