HCL Technologies Ltd has announced a significant $150 million investment in Sarvam AI, an Indian full-stack AI company, acquiring a 10.46 percent stake. This strategic move prompted foreign brokerage Nomura to reiterate its 'Buy' rating on HCL Tech shares, setting a target price of Rs 1,600. This target suggests a potential 43 percent upside from HCL Tech's Monday closing price of Rs 1,119.15.
On Tuesday, following the announcement, HCL Tech shares saw a positive reaction, rising 3.80 percent to Rs 1,161.75 on the BSE. Nomura's valuation of HCL Tech is based on 14 times its estimated FY28 earnings per share (EPS) of Rs 79.60.
Understanding Sarvam AI
Sarvam AI, based in Bangalore, is recognized as India's leading AI company. It specializes in building advanced AI models for text and other data formats, developing AI products for businesses, developers, and government agencies. Sarvam AI primarily focuses on four key industries: banking, insurance, government technology, and defense, working across language, speech, vision, and document processing. All its models are developed from scratch in India.
Recent releases include foundational models trained entirely in India. Sarvam 105B reportedly matches or surpasses larger reasoning models in knowledge, reasoning, and agentic benchmarks, while Sarvam 30B is optimized for edge computing on consumer hardware.
Sarvam AI's Unique Capabilities
- Sarvam Vision: Engineered for handwriting and Indian language records, it's currently digitizing over 3.5 crore pages of insurance forms and legacy land records.
- Speech Models: These models effectively operate in India's complex linguistic environments, transcribing more than 5 lakh hours of audio monthly.
- Conversational Platform: Handles over 20 lakh interactions daily, with usage doubling in recent months.
- Agentic Platform: Rapidly scaling, it powers a leading fintech's 350,000-strong sales force, delivering demonstrable gains through sales enablement.
- Developer Adoption: Sarvam's models are also widely adopted by developers via its inference platform in India, processing 1 crore API calls daily, with usage tripling over the last three months.
HCL Tech's Stake and Strategic Rationale
Sarvam AI is in the process of raising $300 million at a post-money valuation of $1.5 billion. Alongside HCL Tech, other prominent investors in this round include private equity and venture capital firms like Peak XI, Bessemer Venture Partners, and Khosla Ventures. HCL Tech anticipates closing its 10.46 percent investment within two weeks, with no regulatory approvals required.
HCL Tech's investment in Sarvam AI is driven by several strategic objectives:
- Industry-Specific AI Solutions: It will enable HCL Tech to develop bespoke industry and client-specific language models and AI solutions for its global client base, offering competitive price-to-performance and differentiated enterprise AI across various sectors.
- Expanding Multilingual AI: The stake will leverage and expand Sarvam's multilingual AI capabilities both within India and internationally, supporting sovereign AI initiatives and enterprise deployments in global markets.
- Accelerating Sovereign AI: The partnership aims to accelerate the development and adoption of sovereign AI solutions for governments, regulated industries, and enterprises that require localized, secure, and compliant AI deployments.
For Sarvam AI, HCL Tech's extensive enterprise transformation expertise and global client relationships will be instrumental in building a robust, end-to-end sovereign AI ecosystem. The funds raised will also support Sarvam's ongoing research and development for training its next-generation frontier models, focusing on agentic AI, coding, and cybersecurity use cases, while ensuring access to compute at scale for broader industry deployment.