Sarvam AI Plans $300 Million Fundraise at $3 Billion Valuation; HCLTech Q2 Profit Jumps 21%

Sarvam AI Plans $250-300 Million Fundraise at $3 Billion Valuation

Indian artificial intelligence startup Sarvam AI is reportedly in discussions to raise $250-300 million at a valuation of around $3 billion, according to people familiar with the matter cited by The Economic Times.

If completed at the proposed valuation, the fundraising could double Sarvam's valuation within approximately four months and position it among India's most highly valued AI startups.

The discussions are reportedly at an early stage, with the company exploring participation from large domestic enterprises and institutions. The proposed investment amount and valuation could change as negotiations progress.

Sarvam's fundraising plans come as Indian technology companies and investors increasingly focus on developing AI models, computing infrastructure and applications tailored to domestic languages, businesses and government requirements.

Sarvam's Valuation Could Double in Four Months

Sarvam AI secured the first close of its $300 million Series B round in June 2026, raising $234 million at a post-money valuation of $1.5 billion.

The round included investment from HCLTech and Bessemer Venture Partners, alongside continued support from existing investors Khosla Ventures and Peak XV Partners, according to the company's announcement.

The proposed new round would represent a significant increase in valuation if the discussions result in a deal at $3 billion.

However, the latest fundraising remains under discussion. The reported valuation should not be treated as a completed transaction or a confirmed final valuation.

What Does Sarvam AI Do?

Founded by Vivek Raghavan and Pratyush Kumar, Sarvam AI is developing AI models and applications designed for Indian languages and local business requirements.

Its work spans several parts of the AI technology stack, including model research, training and inference infrastructure, and applications for enterprises and public-sector organisations.

The company's focus is on making AI useful across India's linguistic and business landscape, including applications that can understand voice inputs, process documents and support tasks in Indian languages.

Sarvam's customers and users include organisations in sectors such as insurance, banking and financial services. Reported customers include Life Insurance Corporation of India, SBI Life, IDFC First Bank, Tata Capital and Cred.

The company is also expanding its work with government departments. Maharashtra has approved the deployment of Sarvam's Indus AI workspace across departments for tasks such as drafting, translation and document analysis, with government data hosted within India, according to The Economic Times.

Why Is Sarvam Raising More Capital?

The company is working to develop larger AI models and expand the computing infrastructure needed to train, operate and deploy them.

Building advanced AI systems requires substantial spending on computing capacity, engineering talent, research and product development. For companies developing their own models, access to computing resources can be a major factor in scaling operations and serving enterprise customers.

Sarvam is reportedly planning to develop a trillion-parameter model and establish a San Francisco office to recruit researchers. It has also hired Sashikumar Sreedharan, the former head of Google Cloud India, according to the report.

A new funding round could support these ambitions if the proposed transaction is completed. The final deployment of any funds would depend on the terms of the eventual deal and the company's plans.

HCLTech's Q2 Net Profit Rises 21% to ₹5,132 Crore

While Sarvam's fundraising discussions highlight investor interest in AI, HCLTech's latest results show how established technology services companies are also benefiting from growing demand for AI-related services.

HCLTech reported a 21% year-on-year increase in consolidated net profit to ₹5,132 crore in the second quarter of FY27, compared with ₹4,235 crore in the corresponding quarter a year earlier.

Consolidated revenue increased 11.5% year on year to ₹35,620 crore, according to the company's results reported by The Economic Times and Reuters.

The company also reported an operating margin of 18.2%, supported by improved execution and growth in its advanced AI business.

Despite the increase in profit and revenue, management remained cautious about the demand environment, citing continued uncertainty and changes in how clients purchase technology services.

HCLTech Raises Lower End of FY27 Revenue Guidance

HCLTech raised the lower end of its revenue growth forecast for the financial year ending March 2027.

The company now expects revenue growth of 2.5-4% in constant-currency terms, compared with its earlier forecast range of 1-4%.

The change reflects some improvement in demand towards the end of the quarter. However, the company has retained the upper end of its guidance and continues to monitor the impact of global uncertainty and evolving customer spending priorities.

HCLTech CEO C Vijayakumar said demand had improved towards the end of the quarter but described the operating environment as fluid. Management has therefore maintained a cautious outlook despite the strong year-on-year increase in quarterly profit.

Advanced AI Revenue Becomes an Important Growth Driver

HCLTech's advanced AI business continued to expand during the quarter.

The company's annualised advanced AI revenue rose 28% sequentially to $219 million. This reflects the growing contribution of AI-related services to its business as clients invest in data, automation and technology transformation.

At the same time, AI is changing the traditional IT services business model. Customers increasingly expect technology providers to deliver productivity gains and measurable outcomes, rather than simply charging based on the number of hours worked.

This shift can create new revenue opportunities for companies that develop and deploy AI solutions, but it can also put pressure on conventional service revenues and pricing.

HCLTech has said customers are prioritising AI, data and operating-model transformation where there is a clear business case for improved efficiency, innovation and resilience.

HCLTech Reports Strong Deal Wins

HCLTech reported new deal wins worth $3.26 billion during the quarter, compared with $2.57 billion in the corresponding period a year earlier.

The wins included a significant contract worth $1.14 billion with Mercedes-Benz.

Strong deal bookings can provide visibility into future business, although the timing of contract execution and revenue recognition depends on project schedules and customer requirements.

The company's results therefore present a mixed picture: profitability and deal wins improved, but management remains cautious about the pace of demand and the outlook for traditional IT services.

HCLTech Declares ₹12 Interim Dividend

HCLTech also announced an interim dividend of ₹12 per share.

According to the company's reported announcement, October 16, 2026, is the record date, while dividend payment is scheduled for October 26, 2026.

The dividend adds to the company's quarterly announcements as investors assess its earnings performance, growth outlook and returns to shareholders.

Investors should consult the company's official exchange filings for the applicable eligibility conditions and final payment details.

What the Developments Mean for India's AI and IT Sector

The developments involving Sarvam AI and HCLTech highlight two different but related trends in India's technology industry.

For startups such as Sarvam, investor interest is supporting efforts to build AI models, computing infrastructure and applications for Indian businesses and government organisations. A potential fundraise at a higher valuation would indicate continued investor appetite for companies seeking to develop AI technology domestically.

For established IT services companies such as HCLTech, AI is creating opportunities to develop new services and win transformation contracts. At the same time, these companies must adapt to changing client expectations, pricing models and the possibility that AI-driven productivity could reduce demand for some traditional services.

The long-term outcome will depend on whether companies can turn AI investments into sustainable revenue growth, strong margins and commercially successful products.

Key Takeaways

• Sarvam AI is reportedly discussing a $250-300 million fundraise at a valuation of around $3 billion.

• The discussions are at an early stage, and the final amount and valuation may change.

• Sarvam raised $234 million in the first close of its $300 million Series B in June 2026 at a $1.5 billion post-money valuation.

• The startup is developing Indian-language AI models and applications for enterprises and government organisations.

• HCLTech's second-quarter FY27 net profit rose 21% year on year to ₹5,132 crore.

• HCLTech's revenue increased 11.5% to ₹35,620 crore.

• The company raised the lower end of its FY27 revenue growth guidance to 2.5%, while retaining the upper end at 4%.

• HCLTech's annualised advanced AI revenue rose 28% sequentially to $219 million.

• Quarterly deal wins totalled $3.26 billion, including a $1.14 billion Mercedes-Benz contract.

• HCLTech declared an interim dividend of ₹12 per share.

Bottom Line

Sarvam AI's reported fundraising discussions underline the growing interest in India's AI ecosystem, particularly in companies developing language models and applications for local markets. A $250-300 million round at a $3 billion valuation would mark a substantial increase from its June valuation, although the transaction has not been finalised.

Meanwhile, HCLTech delivered strong second-quarter profit growth and increased its revenue guidance, supported by advanced AI revenue and new deal wins. However, its cautious commentary on demand highlights the challenges facing technology services companies as AI reshapes customer spending and traditional business models.