India's primary equity market achieved unprecedented heights in 2025, with companies raising a record Rs 1.75 trillion through initial public offerings, powered by an unexpected hero: the retail investor. Individual investors poured nearly Rs 42,000.00 crore into mainboard IPOs in 2025 - the highest ever and three times what they invested in 2023.

Record-Breaking Market Performance

The 2025 IPO landscape demonstrated remarkable resilience and investor appetite, with retail participation emerging as the defining force behind the boom in one of the world's largest markets.

Retail money channelled directly and through mutual funds has emerged as the defining force, with the trend reflecting retail investors' growing engagement with equity investing due to higher incomes, steady SIP savings, and longer investment horizons.

Retail Investor Dominance

The retail investor surge represents a fundamental shift in India's IPO ecosystem, with individual participation reaching levels that distinguish India globally from markets like the US and Europe.

"What you are seeing is people seeing the opportunity in Indian markets, with a flood of retail money coming in directly and through mutual funds," said Uday Kotak, Kotak Mahindra Bank founder. "This has been a one-way trend for several months, with foreigners selling while Indians continue buying both directly and through mutual funds."

Structural Advantages and Market Framework

India's regulatory framework ensures dedicated retail quotas in IPOs, creating structural inclusion that leads to consistently high retail subscription levels even in large issues. The allocation methodology limits exposure and risks for individual investors, making participation economically attractive.

"The retail portion is capped, and allotments in oversubscribed issues are done through proportionate or lucky draw-based mechanisms," said Dharmesh Mehta, MD at DAM Capital Advisors. "This makes IPO investing more like a low-risk lottery. Even if a few offerings don't perform well, the downside is limited and usually offset by IPOs that list strongly."

Notable IPO Highlights and Market Outlook

The 2025 IPO market featured global names like LG Electronics and homegrown startups such as PhysicsWallah and Groww, demonstrating the market's appeal across diverse sectors and company profiles.

Foreign portfolio investors also surged their IPO investments to four times 2023 levels, drawn by fresh entry points, better valuation comfort, and access to high-growth companies. While FPIs withdrew record funds from India's secondary market, they pumped money into the primary market.

"Retail investors, both directly and indirectly through mutual funds and insurance companies, are a big reason behind the tremendous supply of IPOs in 2025," said Pranav Haldea, MD at Prime Database. The sustained retail participation, combined with strong institutional interest, positions India's IPO market for continued robust activity.

Credit rating agency Moody's has issued a cautionary forecast for non-banking financial companies (NBFCs) in India, predicting an increase in vehicle loan delinquencies. This projection signals potential challenges ahead for the vehicle financing sector within these financial institutions.

Moody's Forecast

Moody's, a renowned global credit rating agency, has raised concerns about the performance of vehicle loans in the NBFC sector. The agency's analysis suggests that NBFCs are likely to face higher rates of delinquencies in their vehicle loan portfolios in the near future.

Implications for NBFCs

This forecast carries significant implications for NBFCs, which play a crucial role in India's financial ecosystem:

1. Financial Stress: An increase in loan delinquencies could lead to financial stress for NBFCs, potentially impacting their profitability and overall financial health.

2. Risk Management: NBFCs may need to reassess and strengthen their risk management practices, particularly in the vehicle financing segment.

3. Lending Practices: The forecast might prompt NBFCs to tighten their lending criteria for vehicle loans, potentially affecting loan disbursements in this category.

4. Market Perception: Increased delinquencies could affect investor and market perception of NBFCs, possibly influencing their cost of capital and growth prospects.

Factors Contributing to Delinquencies

While Moody's report details are not fully disclosed, several factors could contribute to rising vehicle loan delinquencies:

• Economic uncertainties affecting borrowers' repayment capabilities
• Fluctuations in the automotive market
• Changes in consumer behavior or preferences
• Potential gaps in credit assessment processes

Industry-wide Impact

The forecast by Moody's is likely to resonate across the NBFC sector, prompting industry-wide discussions on:

• Strategies to mitigate rising delinquencies
• Enhancing credit evaluation processes
• Exploring new technologies for better risk assessment
• Potential regulatory implications

As this situation unfolds, it will be crucial for NBFCs to closely monitor their vehicle loan portfolios and adapt their strategies to navigate the challenging landscape predicted by Moody's. Stakeholders, including investors, regulators, and borrowers, will be watching closely to see how NBFCs respond to this forecast and manage the potential rise in vehicle loan delinquencies.