Even as the shares of Titan Co. Ltd have outperformed the benchmark Sensex in 2016, its less than glittering March quarter results—announced Friday evening—do little to inspire further confidence.

At 38 times FY17E and 33 times FY18E earnings, the stock’s valuations are rich and adequately reflect the underlying strength of the franchise, said Motilal Oswal Securities Ltd in its post-results note. The bitter truth is that demand is lacklustre and investors have no option but to wait for the scenario to change. Also, in the near term, investors will have to evaluate the impact on revenues of the need to furnish permanent account number (PAN) for all transactions above 2 lakh.

The implementation of the limit was one reason that affected sales during the March quarter. Further, while the company did not participate in the jewellers’ strike, it had to close many of its stores on many occasions, resulting in sales loss. The advancing of promotions to December in both the watch and jewellery divisions and other factors, particularly lower walk-ins, affected revenues badly in the March quarter. Its revenue in the past quarter declined 1.6% year-on-year to 2,456 crore. That pales in comparison with the 17% December quarter revenue growth.

For the March quarter, the jewellery revenue remained flat while that of watches, accounting for a relatively much smaller portion of revenue, declined 13%. Jewellery earnings before interest and tax (Ebit) declined 11% to 205 crore while watches’ Ebit fell as much as 91% to 4.5 crore. The watch business was affected on account of the early activation (of promotions) and a 19% decline in volume due to the exit from a few low-ticket products.

Overall, Titan’s operating profit declined 22% to 210 crore. However, a sharp decline in tax outgo helped restrict net profit ( 184 crore) decline to 14%. The management maintains its FY17 guidance of 15-20% jewellery revenue growth, with the Golden Harvest Scheme (GHS) expected to contribute 1,400 crore to revenue and the margins expected to remain flat, says Elara Securities (India) Pvt. Ltd. Of course, a lower base should help. Jewellery revenue declined 7.5% in financial year 2016. For watches, the going may continue to remain tough, especially with heavy discounting from the online platform eating into sales.

“Overall, we believe that Titan’s margins (adjusted for one-offs) may remain flattish over FY17-18E as the company focuses on revenue growth across segments in a tougher competitive environment," pointed out Elara Securities in its quarterly update. Considering muted demand and seemingly high valuations, Titan’s shares have no good reason to shine in the coming days unless, of course, demand surprises dramatically.