StocksResult
📝 What is Face Value of a Stock?
📊 What is Face Value of a Stock?
When you check the details of any stock, you may notice the term "Face Value" written alongside the price, volume, market cap, etc.
But what is this "Face Value"?
Does it affect the stock price?
Is it important for investors to know?
Let’s break it down in a simple way.
✅ Meaning of Face Value in Stocks
💡 Face Value (Par Value) of a stock is the original price of the share decided by the company when the stock is first issued.
✔️ It has nothing to do with the current market price.
✔️ It is the basic value written on the share certificate.
For example:
✔️ A company may issue its shares with a Face Value of ₹10 per share.
✔️ But the same share’s market price today may be ₹500 or ₹1000 — depending on demand, supply, and company performance.
So, Face Value ≠ Market Price.
🔍 Why is Face Value Important?
1️⃣ For calculating Dividends 💰
Companies often declare dividends as a % of Face Value.
Example:
✔️ If a company announces a 200% dividend and the Face Value is ₹10,
✔️ You will get ₹20 dividend per share (200% of ₹10).
2️⃣ For Stock Splits & Bonuses 🔄
Face Value plays a role when companies split their shares or issue bonus shares.
Example:
✔️ If a stock split happens from ₹10 Face Value to ₹5, the number of shares you hold will double — but the overall investment value remains the same.
3️⃣ For Issuing New Shares or Bonds 🏦
When companies raise funds via bonds or preference shares, Face Value is a deciding factor in pricing and interest.
💡 Face Value vs Market Value vs Book Value
✔️ Face Value — Original value set by the company at the time of issue (Example: ₹1, ₹2, ₹5, ₹10).
✔️ Market Value — Current price of the share in the stock market (Example: ₹500, ₹1200).
✔️ Book Value — Value of the company per share based on its assets and liabilities.
✅ Does Face Value Affect Investment?
✔️ No direct impact on trading or price movements.
✔️ Mostly relevant for understanding dividends, stock splits, and accounting records.
✔️ A stock can have Face Value ₹1 but its market price may be ₹3000 — or Face Value ₹10 but market price ₹50 — depending on performance and demand.
🎯 Example to Understand Easily:
Think of Face Value like the "printed price" on a ticket — say ₹10 — but you can sell or buy that ticket in the market for ₹500 depending on demand.
✔️ Printed Price (Face Value) = ₹10
✔️ Market Price = ₹500 (or whatever buyers are ready to pay)
✔️ Similarly in stocks — Face Value stays fixed but the stock’s market price keeps changing every second in the market.
⚠️ Common Misunderstandings:
❌ Face Value is not the price you pay to buy the share in the market.
❌ Face Value does not reflect the true worth or performance of the company.
❌ A lower Face Value stock is not cheaper — it depends on market price.
📝 Conclusion:
✅ Face Value = Original fixed value of a share set by the company.
✅ It is used for dividend calculation, stock splits, and accounting purposes.
✅ It has no direct role in market price or daily trading decisions.
✔️ As a retail investor — keep an eye on it only when understanding dividends, splits, bonuses, or when reading company financials.
Disclaimer:
📌 This blog is for educational purposes only. Always consult your financial advisor or do research before investing.