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Face value vs market value of a share: what is the difference
Face value is the nominal value of a share set by the company, often 10, 2 or 1 rupee. Market value is the price it actually trades at on the exchange, driven by demand and fundamentals.
In one line
Face value is the fixed nominal value a company assigns to each share (commonly 10, 2 or 1 rupee) and is used for accounting and to express dividends, while market value is the live exchange price set by supply and demand, which is why a share with a 1 rupee face value can trade at hundreds or thousands.
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Two different numbers
Face value, also called par value, is the base value printed against a share when it is issued, decided by the company and recorded in its books. It is usually a small, round figure like 10, 5, 2 or 1 rupee. It rarely changes, the main exception being a stock split, which deliberately cuts it. Face value anchors the share capital line on the balance sheet.
Market value is what a buyer will actually pay on the exchange right now. It floats on earnings, growth, sentiment, interest rates and supply and demand. A company with a 1 rupee face value and a strong business can trade at 3,000 rupees, while a 10 rupee face value penny stock might trade below its face value if the business is broken. The two numbers are almost never the same.
Why face value still matters
Dividends in India are usually declared as a percentage of face value, which trips up beginners. A 300% dividend on a 2 rupee face value share is 6 rupees per share, not 300. Always convert the headline percentage to rupees using the face value before judging a payout.
Face value also drives corporate-action math. A stock split is defined by the change in face value, a bonus ratio is applied on the existing face-value shares, and the number of shares outstanding times the face value gives the paid-up capital. So while you trade on market value, the company's structure and its payouts are quoted in face value terms.
FAQ3 reader questions · AEO-eligible
Common questions on face value.
What is the difference between face value and market value?
Face value is the fixed nominal value the company assigns to a share, like 10 or 1 rupee, used for accounting and dividends. Market value is the live price the share trades at on the exchange, driven by demand and fundamentals.
Why is dividend calculated on face value?
Indian companies declare dividends as a percentage of face value by convention. A 300% dividend on a 2 rupee face value share equals 6 rupees per share, so you must convert the percentage using face value to get the rupee amount.
Can market value be lower than face value?
Yes. A struggling company's shares can trade below their face value if the market judges the business to be worth less than its nominal par value. There is no rule that market price stays above face value.
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