Foreign brokerage Nomura on Tuesday reiterated its 'Buy' rating on HCL Technologies Ltd after the IT major announced a $150 million investment in full-stack Sarvam AI for a 10.46 per cent stake. Nomura, which has a target price of Rs 1,600 on the stock, said this was the first investment of its kind by an Indian IT services company in a sovereign AI company. The brokerage valued HCL Tech at 14 times estimated FY28 earnings per share (EPS) of Rs 79.60.

On Tuesday, HCL Tech shares rose 3.80 per cent to Rs 1,161.75 on the BSE. The Nomura target suggested 43 per cent upside over HCL Tech's Monday closing price of Rs 1,119.15. 

Sarvam AI explained
Nomura said Sarvam AI is India's leading AI company based out of Bangalore. Sarvam builds advanced AI models for text and other formats and creates AI products for three main groups: businesses, developers, and government agencies. 

Sarvam AI focuses on four key industries – banking, insurance, government technology, and defense. It works on language, speech, vision, and
documents and all their models are built from the ground up in India. 

"In the last few months, it has released foundational models, all trained from scratch in India. Sarvam 105B matches or outperforms larger reasoning models on knowledge, reasoning, and agentic benchmarks, while Sarvam 30B is optimised for the edge, running on consumer hardware," Nomura noted.

What makes Sarvam AI special?
Sarvam Vision, built for handwriting and Indian language records, is being used to digitise over 3.5 crore pages from insurance forms to legacy land records, Nomura noted adding that Sarvam’s speech models work in India's complex settings, transcribing over 5 lakh hours of audio each month. Sarvam’s conversational platform handles over 20 lakh interactions a day, with usage doubling in the last two months. 

"Sarvam’s agentic platform is scaling rapidly. A leading fintech powers its 350,000-strong sales force with a sales enablement platform that is delivering demonstrable gains. Sarvam’s models are also being adopted by developers served on its inference platform in India which processes 1 crore API calls daily, with usage tripling in the last three months," Nomura said.

HCL Tech stake in Sarvam AI 
Sarvam is raising $300 million at post-money valuation of $1.5 billion. Along with HCL Tech, private equity and venture capital companies like Peak XI (unlisted), Bessemer Venture Partners (unlisted) and Khosla Ventures (unlisted) invested in the round. HCL Tech expects to close the investment (10.46 per cent stake) in two weeks time and does not require any regulatory approvals.

3 reasons behind HCL Tech's Sarvam AI investment

The Sarvam AI investment will enable HCL Tech to develop industry and client-specific language models and AI solutions for its global client base, delivering compelling price-to-performance outcomes and enabling differentiated enterprise AI solutions across industries. In addition the stake in the sovereign AI will leverage and expand Sarvam's multilingual AI capabilities in India and beyond India for both sovereign AI initiatives and enterprise deployments across global markets. 
It would Accelerate the development and adoption of sovereign AI solutions for governments, regulated industries, and enterprises seeking localized, secure, and compliant AI deployments.

For Sarvam, HCL Tech’s enterprise transformation expertise and global client relationships will aid in building a powerful, end-to-end sovereign AI ecosystem for India and beyond. The funds raised will help Sarvam continue its R&D for training its next-generation frontier models for
agentic AI, coding, and cybersecurity use cases, as well as access to compute at scale to expand its
deployment across key industry verticals.