Is there a way I can compress the RAR file again?
Again? No, see this question for why a compressed file cannot be compressed further. If anything, re-compressing an already compressed file may even increase the resulting file.
If not, is there any other way out?
Your best bet is to either tweak the WinRAR settings to the file you were trying to compressing, or to use a better compression algorithm. 7-Zip supports several different powerful algorithms, and by tuning them just right, you could potentially get a big increase in savings over RAR.
I usually like to keep everything set to the maximum (figure 1). It takes longer to compress, but it’s usually worth it.
You can also try nanozip. It is an experimental archiver (read alpha) and runs very slowly, but gives shockingly good compression most of the time.
Of course, as always, compression results will depend on your file(s). You said you are compressing an ISO which is essentially just the contents of the files with little file-system overhead. Depending on the nature of the files, you may get some decent compression, but if it is an installation disk, then the contents of the main software are likely already compressed, so you won’t get that much more from the remaining files.
Figure 1: 7-Zip settings set to maximum compression