What face value is

Every share has a face value (also called par or nominal value): the amount printed on it, set when the shares are issued (a split changes it later) — ₹10 is common in India, ₹1 and ₹2 also. It is an accounting quantity: share capital on the balance sheet is face value × number of shares, and dividends are often declared as a percentage of it (“150% dividend” on a ₹10 face value means ₹15 a share).

It has nothing to do with what a share is worth. Desi Bites’ shares have a ₹10 face value and listed at ₹640. Britannia’s have a face value of ₹1 and traded at ₹5,851 on 30 June 2025. The gap between face value and price is the entire history of the business.

Face value matters here because two corporate actions change it, or change the share count around it, and both reliably confuse people.

Splits and bonuses

A stock split divides each share into several: a 1:2 split turns one ₹10 face-value share into two ₹5 face-value shares. Share count doubles, face value halves, share capital is unchanged.

A bonus issue gives shareholders extra shares free: a 1:1 bonus gives one new share for each held. Share count doubles, face value stays at ₹10, and the company moves an amount equal to the new shares’ face value from its reserves into share capital. Total equity is unchanged; it’s a reshuffle between two lines of the same section.

Either way, the company is exactly the same company. Same factories, same profit, same debt, same cash. There are just more pieces of paper representing it, so each piece is worth proportionally less.

The formula

After a split or bonus with ratio k (k = 2 for 1:1 bonus or 1:2 split):

Shares outstanding   × k
Price per share      ÷ k          (mechanically, on the ex-date)
EPS, BVPS, DPS       ÷ k
Market cap, P/E, P/B, total equity, PAT    — unchanged

Worked example: Desi Bites does a 1:1 bonus

Hypothetical, using the case study’s listing figures as the starting point:

Before After 1:1 bonus After 1:2 split
Shares (lakh) 12.5 25 25
Face value ₹10 ₹10 ₹5
Share capital (₹ lakh) 125 250 125
Price per share ₹640 ₹320 ₹320
Market cap (₹ lakh) 8,000 8,000 8,000
EPS (post-issue) ₹16.72 ₹8.36 ₹8.36
Book value per share ₹182.24 ₹91.12 ₹91.12
P/E 38.3x 38.3x 38.3x

Read the two bold rows. Market cap is unchanged; P/E is unchanged. Everything per share halved because there are twice as many shares. The only difference between the bonus and the split columns is the accounting: the bonus capitalised ₹125 lakh of reserves into share capital (face value held at ₹10); the split left share capital alone and halved the face value.

For a real-world instance: HDFC Bank issued 1:1 bonus shares in August 2025. Its share price roughly halved on the ex-date, its EPS and book value per share halved with it, and anyone comparing its post-bonus EPS with its FY25 EPS without adjusting would conclude profit had collapsed. It hadn’t. This is why any per-share history — EPS, DPS, price charts — has to be adjusted for splits and bonuses, and why data providers publish “adjusted” series.

Why companies do it

Officially: to improve liquidity. A ₹5,000 share is awkward for a small retail buyer; ₹500 is not. Bonus issues also signal that reserves are healthy enough to capitalise. Unofficially: a lower price can feel “cheaper” to many retail investors, and companies know it. The market cap post made the point that price per share on its own tells you nothing; a split is the cleanest possible demonstration.

🧒 Explain it like I'm 10 (optional — skip if this is already clear)

You have one pizza cut into 8 slices. Someone cuts every slice in half — now you have 16 slices. Do you have more pizza? No. Each slice is half the size.

A “₹320 share” after a split is a half-slice. It’s not cheaper pizza; it’s a smaller piece of the same pizza.

Common mistakes

  • Thinking a post-split share is cheap. Same company, smaller slice. Compare P/E, P/B or EV (enterprise value) multiples, never price.
  • Comparing unadjusted per-share figures across a bonus or split. EPS “falling” 50% on the ex-date is arithmetic, not performance.
  • Treating a bonus as free money. You own the same fraction of the same company. The “gift” is a re-labelling of reserves you already owned.
  • Confusing face value with book value or price. Face value is a nominal amount that only a split (or consolidation) changes. Book value per share is equity divided by shares. Price is what the market pays. Three different numbers.
  • Missing that dividends declared “per cent” are on face value. A “300% dividend” on a ₹1 face value is ₹3 a share, not 300% of anything you paid.

Sources

Takeaway: face value is the nominal amount on a share, unrelated to price; splits and bonuses multiply the share count and divide everything per share by the same factor. Desi Bites at ₹320 after a 1:1 bonus is exactly as expensive as it was at ₹640 — same market cap, same P/E, twice the slices.