Face value of a stock, also known as the par value or nominal value, is the value assigned to a stock by the issuing company. This value is printed on the stock certificate, and represents the minimum value for which the stock can be sold by the issuing company.
For example, if a company has issued a stock with a face value of Rs. 10 per share, it means that the company has assigned a minimum value of Rs. 10 to each share of that stock, and that’s the minimum price at which it can be sold.
It’s important to note that the face value of a stock does not necessarily reflect the market value of a stock, which is determined by the demand and supply in the stock market. Market value of a stock is determined by the current market price and it can be higher or lower than the face value.
Also, in Indian stock market, the dividends are often declared as a percentage of the face value and not the market value. That means the dividend amount for each share will be calculated based on the face value of the share and not the market price.
The face value of a stock is not usually an indicator of its intrinsic value, it’s not a significant parameter to be considered while valuing a stock. Factors like Earnings, Revenue, future projection and management, etc. are considered as primary factors while valuating a stock.