"Valuations seem rich, but justified given high earnings visibility and improving outlook," the research house reasoned.
Maruti Suzuki share price on Friday gained 1 percent intraday to hit a fresh all-time high of Rs 8,695 on the BSE after November sales data and global brokerage house CLSA hiked its target price to five digits.
CLSA has maintained its buy call on Maruti Suzuki while increasing target price to Rs 10,000 per share, implying a potential 16.2 percent upside over Thursday's closing price.
"Valuations seem rich, but justified given high earnings visibility and improving outlook," the research house reasoned.
India passenger vehicle industry is showing signs of easing competitive intensity.
Easing competitive intensity, in small cars and entry sedans, is positive for Maruti, CLSA said, adding more original equipment manufacturers could potentially enter India but are unlikely to make a dent.
The research house feels Maruti is likely to broaden its sports utility vehicle portfolio in coming years, though competition is high.
The India's largest car maker's November sales matched analyst expectations as it sold 1.54 lakh units during the month, higher by 14.1 percent YoY.
The company sold 1.35 lakh units in November 2016 and a CNBC-TV18 poll estimated sales at 1.52 lakh units for November 2017.
The growth was largely driven by domestic sales that grew by 15 percent year-on-year to 1.45 lakh units in month gone by.
At 12:29 hours IST, the stock price was quoting at Rs 8,671.20, up Rs 68.90, or 0.80 percent on the BSE.
