What is Face Value of Share? Meaning, Importance & Examples

The face value of a share is its original price decided by the company when it is first issued. This value stays fixed and helps in calculating profits, interest, and other important numbers in the stock market.

Ravi, a 24-year-old from Jaipur, had recently started his first job. With his first salary, he decided to invest in the stock market. His friend suggested a well-known company, and Ravi went ahead and bought one share. The market price of the share was ₹160. 

But when he checked the details on the app, he saw something called the Face Value, which said ₹10. Ravi was confused. He thought he had paid ₹160, so why was the value only ₹10? Ravi learned that though he paid ₹160, the share’s face value was still ₹10. The rest was the extra value built over time due to the company’s growth.

As Ravi said, “Risk toh Spider-Man ko bhi lena padta hai.” But now, he felt ready to take that risk, with a bit more knowledge. In this blog, you will learn about the meaning of What is Face Value of a Share?

What is Face Value of Share? 

After learning that he had paid ₹160 for a share with a face value of ₹10, Ravi had more questions. He opened his laptop and started reading more.

The Face Value of a Share is also called the nominal value or par value. It is the price set by the company when the share is first made. It is written on the share certificate or shown on the screen when you buy a share online.

This value is not decided by the market. It is fixed by the company. So, even if Ravi bought the share at ₹160, the face value remained ₹10.

When companies first start and sell shares to people through IPOs (Initial Public Offerings), they decide on this face value. It is used in accounts, reports, and in the company’s balance sheet.

Importance of Face Value:

Ravi kept learning. He realised that face value was not just a number. It played a key role in how companies showed their profits and strength.

Face value is used in many important financial calculations like:
 

• EPS (Earnings per Share)
   
• P/E Ratio (Price to Earnings)
   
• Return on Equity (ROE)
   

These numbers help investors, like Ravi, understand how well a company is doing.

Here is the table Ravi came across:
 

This made it clear for Ravi. He finally saw how face value connects to real profits and decisions.

He smiled and said, “Yeh dhandha hai, emotions nahi.”

So, why is face value important?
 

• It is used in profit reports
   
• It shows how much dividend can be given
   
• It helps in calculating earnings per share
   
• It reflects a company’s base value
   

Even though it is small, face value has a big role in the share market.

Difference Between Face Value and Market Value:

Ravi saw that the share he bought had a face value of ₹10, but the market value was ₹180. This confused him. How can the same share have two prices?

His friend explained: the face value of share is the original price set by the company. The market value is the current trading price in the stock market. It changes every day based on demand and supply.

Let’s look at it in a simple table Ravi made:
 

For example, in the Tata Technologies IPO in 2024, the face value was ₹2, but the market value went over ₹1,200 on the listing day.

Ravi now understood:

• Face value is fixed and used in company records.
   
• Market value moves with the market.

He repeated the keyword to himself: What is the Face Value of a Share?
It is the fixed value set by the company, not the price seen in the market.

Formula of Face Value:

Ravi wanted to calculate the face value using real numbers. He found this simple formula:

Face Value = Equity Share Capital ÷ Number of Outstanding Shares

He used two examples to understand:
 

So if a company has ₹5,00,000 as equity capital and 50,000 shares, then:

Face Value of Share = ₹5,00,000 ÷ 50,000 = ₹10
It is the result of a basic calculation from the company's capital and shares. Nothing too scary.

Stock Splits & Face Value:

Ravi heard on the news that one of his shares had a stock split. He panicked at first, thinking he had lost money. But that wasn’t true.

A stock split is when a company divides its existing shares into smaller parts. This lowers the face value, but your total investment stays the same.

If Ravi had 1 share of ₹10, and it split 1:1, he would now have 2 shares of ₹5.

Let’s see it clearly:
 

So, nothing was lost. He now had more shares at a lower face value, but the same total amount.

Now Ravi could explain it easily:
A company can lower the face value of shares during a stock split, but it doesn't hurt the investor.

Conclusion:

After reading, watching, and asking questions, Ravi had learned the answer to a common beginner's doubt: What is the Face Value of a Share?
It is the original price fixed by a company when shares are issued. It is used in profits, dividends, reports, and more. It does not change like market value.

He knew now:
 

• Market value changes.
   
• Face value stays fixed.
   
• Face value is used in company maths.
   

Knowing the face value of the share helped Ravi invest with clarity.

FAQs Related to Face Value of Share

Q1. What is the Face Value of a Share?
It is the fixed price set by the company when the share is created.

Q2. Can the face value change?
Yes, it can change during a stock split, but only the number per share, not total value.

Q3. Is the face value the same as market value?
No. Market value changes daily. Face value remains fixed.

Q4. Where is the face value written?
It is written on the share certificate or shown in the online share details.

Q5. Why is the face value usually ₹10?
₹10 is a standard base value used in many companies for easy maths.

Q6. How is face value useful in IPOs?
It helps investors understand how much the company is asking compared to its base value.

Q7. Does knowing face value help beginners?
Yes. It helps in understanding how shares work and avoiding mistakes.

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LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.