A firm needs funds so run and manage its activities. The use of long-term fixed interest bearing debt and preference share capital along with equity share capital is called financial leverage. The capital structure decision can influence the value of the firm through the earnings available to the shareholders. But the leverage can largely influence the value of the firm through the cost of capital. The present study aims at providing detailed information about the impact of financial leverage on cost of capital and valuation of firm of selected Indian automobile companies listed in national stock exchange during 2004 to 2014. The analysis is fully based on secondary data collected from capitaline database, various journals and websites. One way ANOVA, Correlation and T-test has been used as a tool to analyze the data. The main objective of this study is to find out the impact of financial leverage on weighted average cost of capital and valuation of firm of sampled companies. From the study it has been found out that there is a significant correlation between financial leverage, weighted average cost of capital and valuation of firm. The study concludes that the financial leverage having an impact on weighted average cost of capital and valuation of firm.