Anytime you feel strong enough, ultimately. While waiting till later in the game does allow you to bring new equipment and techniques into the battle, it's not mandatory. She was designed to be fought as a second boss. As such, I'd recommend fighting her no sooner than defeating the game's first boss: Gyoubu Oniwa. You'll want to have at least collected four Prayer Beads before challenging her so you have more health available. More importantly, You will want increased familiarity with the mechanics of the game to save yourself a lot of stress and potential frustration.