Imagine you are buying a book. On the back cover, there is a Printed Price of ₹10, but because the book is a rare bestseller, the shopkeeper is selling it to you for ₹500. That printed price of ₹10 is the Face Value, and the ₹500 you actually pay is the Issue Price.

In an IPO, the Face Value (also called Par Value or Nominal Value) is the fixed, original value assigned to a share by the company when it is first created. It has almost nothing to do with the company's actual success or its market price. It is simply a bookkeeping number used for accounting and legal reasons. In 2026, most Indian companies keep their face value very low, usually ₹1, ₹2, ₹5, or ₹10 to make their shares look organized and easier to split in the future.

Why does Face Value matter?

You might think, If I'm paying ₹500, why should I care about a ₹10 face value? While it doesn't affect your daily trading, it is very important for three big reasons:

1. Calculation of Dividends

In India, companies declare dividends as a percentage of the Face Value, not the market price.

Example: If a company with a Face Value of ₹10 declares a 100% dividend, you get ₹10 per share. Even if the stock is trading at ₹2,000 on the NSE, your dividend is still calculated on that ₹10 base.

2. Stock Splits

When a stock price becomes too high (say ₹10,000), small investors can't afford it. The company then splits the share.

Example: A company with a Face Value of ₹10 does a 1:5 split. Your one share becomes 5 shares, and the new Face Value of each share becomes ₹2.

Face Value helps the government and CAs track the Equity Capital of a company.

Formula: \text{Total Share Capital} = \text{Total Number of Shares} \times \text{Face Value}

Face Value vs. Issue Price vs. Market Value (2026)

It’s easy to get these three mixed up. Here is a simple comparison using a typical 2026 Indian IPO:

Term

Simple Meaning

Example Amount

Face Value

The Printed nominal price in the books.

₹10

Issue Price

The actual price you pay in the IPO.

₹450

Market Value

The price it trades at after listing.

₹600

The Gap (Premium): The difference between the Face Value (₹10) and the Issue Price (₹450) is called the Securities Premium (₹440). This is the extra money you pay because the company is profitable and growing.

Frequently Asked Questions (FAQs)

Is a company with a ₹10 face value better than a ₹1 face value?

No. Face value is just a number. A company’s strength depends on its profits, growth, and management, not its nominal base price.

Can the Face Value change?

Only during a Stock Split (it goes down) or a Consolidation (it goes up). Otherwise, it remains fixed for years.

Does Face Value affect the IPO's success?

Not really. Investors look at the Valuation (P/E ratio) and the business model. Face value is just a technical detail mentioned in the RHP.

Where can I find the Face Value of an IPO?

It is clearly mentioned on the first page of the Red Herring Prospectus (RHP) and on all stock market apps in the Company Details section.

Why do some companies have a ₹100 face value?

It's an old-school practice. Most modern tech and startup companies prefer ₹1 or ₹10 to keep the share price liquid and affordable for retail investors.

Do I get ₹10 back if the company shuts down?

Not necessarily. If a company liquidates, shareholders get whatever is left after paying all debts. The ₹10 face value is just your claim on the original capital.

Is Par Value the same as Face Value?

Yes. In the US and some other countries, it is commonly called Par Value. In India, we mostly say Face Value.

Do bonus shares change the Face Value?

No. In a Bonus Issue, you get extra shares for free, but the Face Value of each share stays exactly the same. Only a Stock Split changes the Face Value.

Why is the dividend usually a huge percentage?

When you hear 1000% dividend, it sounds amazing! But remember, it's 1000% of the ₹10 face value (which is ₹100). Always check the face value before getting too excited about dividend percentages.

Is Face Value used to calculate the P/E ratio?

No. The P/E ratio is calculated using the Market Price and Earnings Per Share (EPS). Face value is not part of that calculation.

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What is Face Value in an IPO?