Tata Motors (NYSE:TTM) continues to be a very intriguing automaker for investors to own shares of. It, of course, boasts iconic brands such as Jaguar and Land Rover, which many U.S. investors are familiar with, but it also offers micro-compact cars and semi-trucks, and it owns the largest market share of commercial vehicles in India. The automaker's stock shed about 10% of its value on Tuesday after its fiscal third quarter recorded a 96% drop in profit -- but were the results really that poor?

Profit plunge

The number that drove Tata Motors' stock price lower yesterday was solely its bottom line profit. Its third-quarter consolidated net profit fell from 29.53 billion rupees a year earlier down to 1.12 billion rupees ($16.7 million), a devastating plunge. The culprit was easy to find -- at least in terms of brands. Its Jaguar Land Rover (JLR) segment, which contributes the majority of its earnings, posted a 62% decline in net profit as higher depreciation and amortization expenses, unfavorable foreign currency movements, and commodity hedges hit the company.

Image of JLR's Range Rover Sport driving on a highway.

JLR's Range Rover Sport. Image source: Tata Motors.

What management had to say

It was clear from Tata Motors' CEO comments that the goal moving forward was to create a more flexible automaker to adapt to changing markets more efficiently.

"We need to be a high performance organization -- being lean, it's about being agile and it's about having clearly addressed and delegated accountability," Guenter Butschek, CEO of Tata Motors, told a news conference on Tuesday, according to Automotive News. "The company is also implementing a management transformation from the beginning of April aimed at bringing in speed, simplicity and agility to deal with market volatility," he continued.

What analysts had to say

Despite the plunge in profits, analysts from Morgan Stanley still think highly of Tata Motors as an investment. According to Barrons, Morgan Stanley's Binay Singh wrote:

The Q3 story is similar to what we saw in Q2 -- higher than expected forex losses and a slew of costs bunching up in one quarter: (a) Forex losses are now at 7% of JLR's top line and given hedging, we expect these to continue in FY17 and FY18 and they account for a Rs32 and Rs23 per share hit for the company, respectively.

What happens next?

Sure, a wave of unexpected headwinds devastated profits during the third quarter, but management sees a much better fourth quarter on the way. And that's just the near term; the company still has plenty of positive factors going for it in the long term. It's already the largest commercial vehicle manufacturer in India, and it should benefit from an upswing in government spending on infrastructure, which will provide potential for light-vehicle sales demand. Also, consider that India's vehicle density per 1,000 people is roughly 20, which puts into perspective how young this market truly is.

Let's not forget JLR, either, which has posted an annual revenue growth rate of 28% from fiscal 2009, when the company acquired the luxury brands, through fiscal 2016. Its EBITDA margin is healthier than investors of mainstream U.S. automakers are used to, checking in at 15.7% during fiscal 2016.

Ultimately, despite a huge profit plunge during the third quarter, Tata Motors still offers investors an intriguing way to play an emerging India auto market as well as two iconic luxury brands. If investors can wait out the current headwinds, the long-term thesis is very much intact.