Chennai, Mar 2 (IANS): Credit rating agency CARE Ratings on Thursday said the challenging economic and financial conditions continued to impact the pace of corporate earnings in the third quarter of FY23.

Although revenue growth continued in double digits, there was a significant decrease in pace, it said in a report.

Despite an anticipated increase in demand during Q3 due to the festive and holiday season, net sales remained almost unchanged from the previous quarter.

"While there was some relief due to easing input costs, it was partially offset by an increase in interest and employee expenses. Interest costs surged by 23 per cent (year-on-year) during Q3, while employee costs increased by nearly 13 per cent (year-on-year). As a result, operating profit only experienced marginal growth during the third quarter," the report notes.

According to CARE Ratings, on a positive note, both operating profit margin and interest coverage ratio improved sequentially but remained lower than a year ago.

Among sectors, automobiles, IT, power, and capital goods witnessed strong double-digit growth in both sales and profitability whereas crude oil, iron and steel, non-ferrous metals, cement and textile dragged on overall profitability, the report notes after analysing the quarterly earnings results of a sample of 2,201 listed non-finance companies.