* Q1 EPS $0.16 vs est $0.12
* Q1 oper rev $105.9 mln vs est $102.2 mln
* Sees improvement in costs, retention rates
* Shares jump as much as 19 pct (Recasts, adds analysts' comments, further details, share movement)
By Amiteshwar Singh
BANGALORE, April 2 (Reuters) - MSCI Inc's MXB.N quarterly profit fell for the fifth straight quarter, but the results topped market estimates, helped by lower costs, sending the investment analysis and market index company's shares up as much as 19 percent.
"The beat came from lower expenses, especially the Morgan Stanley replacement and allocation expense," Fox-Pitt Kelton analyst Ivy De Dianous told Reuters.
The company was spun off from Morgan Stanley (MS.N) in 2007, and it has been trying to replace the services of its parent company ever since, incurring costs in the process.
During the first quarter, the company, however, spent a lower-than-expected $9.8 million.
De Dianous had projected expenses of $15 million.
The company had spent $14.2 million on the allocation and replacement of the services in the fourth quarter of 2008.
Core retention rate also improved to 91.3 percent for the first quarter ended Feb. 28, from 85.3 percent in the previous quarter.
MSCI has been struggling with retention rates as its clients face budget constraints and consolidate.
Revenue is expected to slow going forward as the operating environment remains very challenging, De Dianous said.
However, as the replacement and allocation costs are expected to stop at the end of the second quarter this year, operating expense should also go down slightly, she added.
"It (the results) looked very very solid," William Blair & Co analyst John Neff told Reuters by phone.
The company earned $16.7 million, or 16 cents a share, compared with $17.9 million, or 18 cents a share, a year earlier.
Analysts expected a profit of 12 cents a share, according to Reuters Estimates.
Operating revenue rose 1 percent to $105.9 million as subscription revenue grew 8.6 percent.
However, operating expenses rose $3.3 million, or 4.8 percent, to $73.1 million in first quarter due to increases in compensation and depreciation costs.
Equity index asset based fees decreased 33 percent to $13.2 million for the company.
Shares of the New York-based company rose to a high of $20.17, but pared some gains to trade up $2.53 at $19.53 Thursday afternoon on the New York Stock Exchange. (Additional reporting by Archana Shankar in Bangalore; Editing by Anne Pallivathuckal and Deepak Kannan)