TIP OF THE YEAR 2009: Eros International (EROS)

Indian entertainment group Eros International floated on Aim in 2005 and the company has managed to beat analysts' growth forecasts ever since. Moreover, the group - which is focused on a range of media-related businesses spanning television syndication to film production - looks set to continue this stellar run into 2009. That reflects the pace of India's economic growth and the increasing popularity of Indian movies across the globe.

Indeed, recession may be sweeping through Europe, but that's not the case in India. In fact, and despite the global financial crisis, Indian government officials expect the economy to grow at an impressive 7.5 per cent for the current fiscal year. And Eros' market look set to benefit. According to PricewaterhousesCoopers (PWC), the total Indian entertainment sector was worth Rs.607.9bn (£8bn) in 2007 and is estimated to grow at a compounded annual growth rate (CAGR) of 18 per cent from 2008 to 2012. PWC also expects the film entertainment sector - valued at Rs110.8bn - to grow at a CAGR of 13 per cent, while the television sector (worth Rs.278bn in 2007), should grow at 22 per cent over the same period.

That's good news for Eros, which currently generates 31 per cent of group sales from theatrical work (which includes film production). A further 28 per cent of sales come from the group's relatively new TV syndication division and this unit is also gaining traction - revenues there jumped 206 per cent to $20.1m (£13.8m) in the six months to end-September.

Bollywood's prospects haven't gone unnoticed in Hollywood, either. Last year, Disney took a 32 per cent stake in Aim-quoted Indian media company UMP Media, while billionaire financier George Soros took a 3 per cent stake in film, broadcast and new media operation Reliance Entertainment, through a $100m capital injection.

Eros itself has secured two international joint-venture deals over the past year - a co-production joint venture with Sony Entertainment to develop, finance, produce and distribute Hindi films, and a distribution joint venture with Lionsgate to monetise more than 13,000 titles in Lionsgate's library. And in an attempt to bolster their exposure to booming Bollywood, it is far from inconceivable that one of these parties - or another Hollywood giant - might acquire strategic stakes in Eros, or bid for the group.

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Still, competition has intensified. The industry has fewer than 20 top movie stars, and their asking prices have increased alongside the popularity and profitability of the market. Although group chairman and chief executive Kishore Lulla says that Eros has an established pipeline of releases providing for "full visibility" through to 2010. Management also adds that there are some "highly awaited" releases due out in 2009 - including Shah Rukh Khan's Billo Barber and Amitabh Bachchan's Aladdin. However, later projects could yet stall should India prove less resilient in the downturn going forward and funding dries up.

But any delays can be mitigated through the strong TV offerings which has been bolstered by the recent launch of Tamil pay-TV channel Ayngaran in Europe. This channel has already become profitable and Mr Lulla says Ayngaran is set to make major contributions to the group in the next 12-18 months. This emphasises just how popular Indian TV and films have become outside India. In fact, Mr Lulla says there has been rapid growth in Poland during 2008 and the group is also seeing robust demand for its dubbed and subtitled content in Germany.

And while there's no dividend forecast for the foreseeable future, Eros does boast an extensive content library with more than 1,900 titles. This catalogue already generates about a quarter of group sales and is valued by Citigroup Global Markets Research analyst, Richard Taylor, at 112p per share.